Gitanjali Gems headed for liquidation over delays

Choksi and his nephew diamantaire Nirav Modi are absconding after the huge financial fraud came to light in February 2018 and are facing extradition from Antigua and the UK, respectively.

Agencies

April 17, 2019, 07:43 IST

MUMBAI: Mehul Choksi-run Gitanjali Gems, which owes over Rs 12,500 crore to 31 financial creditors and is a key player in the Rs 14,000-crore Punjab National Bank (PNB) scam, is headed for liquidation as the committee of creditors has voted to end the resolution process citing time over-run.

Choksi and his nephew diamantaire Nirav Modi are absconding after the huge financial fraud came to light in February 2018 and are facing extradition from Antigua and the UK, respectively.

Together, the uncle-nephew duo have defrauded the staterun PNB of Rs 14,000 crore between 2011 and 2017, using fake letters of undertaking through the bank’s Brady House branch in Mumbai’s Horniman Circle area, which is a stone’s throw away from the RBI headquarters. The lenders of Gitanjali Gems have rejected a resolution proposal and have voted for liquidation, citing time over-run beyond the 180 days, the company informed the exchanges on Tuesday.

The committee of creditors met on March 28, and with a majority of 54%, rejected a plea to continue with the resolution process, and instead chose to go in for liquidation, it added. “The 180 days since the resolution process began ended on April 6. Since extension is not approved by the lenders, the next logical step is to go for liquidation,” the company said in a BSE filing.

A recent Allahabad high court judgment may, however, provide some relief with the court ruling that there shall be no tax levied in case of purchases made at duty free stores at the arrival or departure terminals.